How to Take Responsibility for Your Financial Future

Editor’s note: Tonight’s post is by Lewis Humphries. Lewis is a finance and business blogger from the UK. He writes extensively for sites such as Career Addict and Life Hack, while his work has also featured on sites such as Business Insider, Investopedia and Money Crashers. He also has a passion for personal finance management and entrepreneurship.

If you are anything like us, you will find that your time at work is stalked by stealth-like and malevolent time thieves. From excessive and unnecessary meetings to last-minute drive-by requests that arrive on your desk after 5.00pm, it is extremely difficult to organise your time and achieve your daily goals.

If we extend this principle to your home-life, it is easy to see how successful long-term financial planning can become akin to the Holy Grail for some individuals’ financial health. Given that there is also a wealth of choice in terms of savings accounts and pension plans, UK citizens simply do not have the time to make informed and profitable decisions.

How to Take Responsibility for and Organise Your Financial Future

As if these time constraints are not enough, we must also grapple with constantly changing government legislation. Chancellor George Osborne announced the latest pension reforms in April this year, when it was revealed that individuals with a personal pension scheme would be able to access their funds from the age of 55. This threshold is temporary and may rise to 58 in the next five years, however, making it difficult for time-pressed saves to organise their finances in a suitable manner.

Are you still with us? If not, you have probably been disturbed at your desk by a trivial request or simply decided to go for a lie down in a darkened room. For those of you who are committed to reading on, however, now is the time to assume responsibility for your financial future and invest in making viable, long-term fiscal plans. So, here are some key steps towards achieving these goals and laying the foundations for a more secure financial future!

Change your Outlook and Take the Initiative

In addition to publishing a fine line in speculation, half-naked women and abject nonsense, the tabloid media in the UK also have a strong political influence. These outlets go into overdrive during an election, with the Daily Mirror having recently used its online platform to educate readers on how to oppose the newly elected government. The issue with this type of subjective media is that it creates a blame culture, through which those who are struggling to save are able to accuse the so-called elitist and anti-socialist Tory policies.

Not only is this inaccurate, but it is also potentially costly. Firstly, not only have left and right wing politics become more closely aligned since the emergence of New Labour, but placing blame on a political party negates our own responsibility to save. After all, why would anyone commit to challenging pastimes such as saving and long-term financial planning if they are convinced that the existing government is out to pilfer these hard-earned gains?

Before you nod your head in agreement, it is important to understand the policies that helped the Tories achieve a landslide election win. Not only did the Conservative Party pledge to eliminate taxation for people who work less than 30 hours a week (while also increasingly personal tax allowance to £12,500 by the year 2020), but it also introduced the revolutionary Help to Buy ISA, which is a savings account that targets first-time buyers and sees personal contributions topped up by government funds.

These changes underline the changing political landscape, while they also create a climate where individuals who help themselves can rely on help from the political powers that be. So rather than wallowing in angst and spending your idle time sharing anti-government rants on Twitter, it is important to inform yourself, challenge your outlook and realise that it is your responsibility to plan and save for your own financial future.

Identify the Real Obstacles to Saving

Having blown a David Cameron-shaped hole in your philosophy; now is the time to use your newly discovered positivity to identify the real obstacles to saving. With house price inflation continuing to rise and private rental costs set to reach a staggering £72,000 a year by 2033, from an individual perspective your main considerations should be your income and outgoings. These will have a direct impact on how much you are able to save and reviewing them helps you to determine where you can make positive changes.

If you live a frugal lifestyle with minimal outgoings but find it difficult to save, for example, you will need to address your earning potential. While this would have meant scouring the job boards for a new permanent role or career a decade ago, the rise of the freelance economy offers those with a marketable skill the opportunity to optimise their earnings through contracting work. This market has grown exponentially in recent times, with the number of businesses hiring freelancers having increased by 37% year-on-year since 2013.

The average hourly rate for British freelancers also increased by 6.7% in 2013, while less labour-intensive tasks such as article and content writing have also benefitted from rising demand in the last five years. This creates ample opportunity for you to use your skills and generate additional income, so long as you are willing to forego a little down-time and can organise yourself with the precision of a mom during term-time.

Conversely, the issue may lie with your spending. This is where budgeting comes into play, and modern savers are fortunate that they are able to access a host of innovative apps and Cloud-based tools to organise their finances. Entry-level tools such as Spendbook on the iOS and Android’s Level Money are ideal for beginners, as they are easy to use and help you to do everything from estimate your income and calculate outgoings to set savings goals that are based on a percentage of your income.

With the time saved by not blaming others, it should be relatively simple to save more and become an independent financial thinker.

Do not be Afraid to Ask for Help When Comparing the Financial Market

If you close your eyes, you can visualise yourself approaching your journey’s end. While the finishing line may be in sight, however, you will probably be weary after continuous positive thinking, endless budgeting and hours of burning the midnight oil. You need to steel yourself for one final push; however, as while it is one thing to have the inclination and the ability to save it is another to use this capital wisely.

Let’s start with pension planning, for example, which can be as complex as attempting to complete a Rubik’s Cube while wearing a blindfold. Just read an article about pension drawdown rules, which offers a brief insight into the sheer wealth of options and plans available to workers. It is almost impossible to learn everything that there is to know about pensions in reality, however, and while you should research the market your first port of call should be to check in with a knowledgeable industry expert.

This will become easier in 2017, as Britons will be forced to save for their retirement in company schemes in a bid to slash soaring state pension bills. This will help to drive a flow of information and data for workers, which in turn will highlight the core differences between state and private pensions. It will also help to familiarise citizens with the tax levies and restrictions associated with pensions, negating the need for extensive chalkboard presentations and hours of extensive Internet research!

In terms of normal savings, you will hopefully have determined a percentage of your monthly income that can be set aside. The next step is to identify a viable savings vehicle, as while those looking to build towards a specific goal such as purchasing a house can simply invest in a Help to Buy ISA, others must compare the market for accounts that offer the best interest rates and ROI. Accounts that prevent withdrawals are best for long-term savers, while rates in excess of 4% are well above average in 2015.

We all have to take charge of our financial future and these are some of the ways how to it.

photo credit: Fortune Cookie – Success via photopin (license)